Suppose That the Bank of Bananas Has Excess Reserves of $10,000,000

question 88

Multiple Choice

Suppose that the Bank of Bananas has excess reserves of $10,000,000 and checkable deposits of $200,000,000.If the bank has a reserve requirement of 25 percent,what is its total amount of required reserves?

• A) $10,000,000
• B) $40,000,000
• C) $50,000,000
• D) $60,000,000
• E) $202,500,000

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Definitions:

Price Ceiling

A government-imposed maximum price that can be charged for a good or service, intended to protect consumers from high prices.

Market Demand

The aggregate of a good or service that each consumer in a market is eager and qualified to purchase at differing prices.

Binding

A situation where a restriction, such as a price ceiling or floor, actually affects the market outcome because it is set above or below the equilibrium price.

Rent Control

Government policy or laws that set limits on the amount of rent a landlord can charge tenants, often aimed at making housing affordable.